By JOT CONDIE
The recent report on the cost of state regulations to California’s small businesses takes a step in a new direction one where our state government is actually responsible for determining how our economy is impacted by rules and regulations. California has tough environmental reviews, guidelines and mandated studies, but we currently have no parallel process for protecting taxpayers and businesses from inefficient and unfair government programs. And that needs to change now if we expect businesses to grow the state out of this recession.
California’s regulatory environment isn’t an abstraction that only exists on editorial pages and in conversations at think tanks it impacts all of our lives in tangible ways. If you’ve ever had your waiter say, “I wanted to introduce you to Mary, she’ll be taking over while I go on my break,” then you have already experienced California’s onerous and ambiguous meal-and-rest regulations, which require workers to take a mandatory break four hours into their shifts. Under the current law, restaurant managers are put in the awkward position of forcing staff literally to leave money on the table. Your server isn’t just leaving you, they’re walking away from the tips that they’ve earned from helping you and other patrons. Most servers will tell you they hate walking away from their customers, and most managers will tell you they hate policing their staffs.
California’s regulations don’t just impose costs on small businesses, they impose costs on all Californians. Now more than ever, policymakers must evaluate California’s regulatory environment for its effectiveness and efficiency a study recently released by the Governor’s Office provides an opportunity for just such an exercise.
The cost report released by the Governor’s Office of Planning and Research provides some jaw-dropping figures about just how expensive California’s package of regulations has become for our state’s businesses. Unfortunately, in his Comment column in the Sept. 28 issue (“Serious Issue, Dubious Report”), the Business Journal’s editor, Charles Crumpley, gets lost in an academic debate about the methodology used by the report’s authors. In his analysis of whether a top-down or bottom-up approach is superior, Crumpley loses sight of the underlying issue: that no one knows the facts about regulatory costs and no one is required to obtain them. As a first-of-its-kind study, it inevitably was going raise as many questions as it answered. From the perspective of California’s businesses, we’re simply thankful that this study opens up the conversation, and hope that it will be a catalyst for further analysis and definitive action to improve the efficiency and cost-effectiveness of our state’s regulations.
Rule, not exception
Looking at the cost and economic impact of regulations should be the rule not the exception. For too long, the state has imposed new burdens without any analysis of the potential costs or any consideration of alternative means for achieving the goals. This careless approach is a contributing factor to the loss of the state’s taxpaying business base.
It would provide valuable information to look at the regulatory climate through an academic and economic lens, and this study helps move the ball forward on that front. Creating a process to evaluate the economic impact of legislative and regulatory decisions before they are made (rather than after) would be a much better way to protect our taxpayers, our economy and our state’s quality of life.
Opponents of economic analysis will claim that the analysis is simply designed to stop progressive programs. But every president since Reagan, both Democrat and Republican, has required the federal government to analyze the costs of regulations and look at alternatives. Why haven’t we done the same thing at the state level? Mr. Crumpley’s editorial quoted a local entrepreneur who said ,”There is no question that the regulatory (climate) has negatively impacted businesses (it could be more or less than the study states), but we need accurate information to make thoughtful, important decisions.”
Rather than wasting time arguing about the conclusions or methodology of the administration’s study of the costs of state regulations, the state should be working to help the taxpayers and businesses that we all hope will carry us out of the recession. If Sacramento is unwilling to change its approach, then we need to change Sacramento.
Jot Condie is president and chief executive of the California Restaurant Association. He lives in Sacramento.
